Crypto Crash Hasn’t Negatively Impacted Broader Financial System, IMF Says
The International Monetary Fund (IMF) said the recent crypto market crash posed no threat to the broader financial stability of the global economy.
The July 26 “Gloomy and More Uncertain” report says the rising rate of inflation and the possibility of a recession caused by the war in Ukraine and continued COVID lockdowns have left the global economy in dire shape.
According to the IMF, while the crypto industry has seen “spectacular sales”, the global economy seems immune to its effects.
“Crypto assets have seen a dramatic sell-off that has led to heavy losses in crypto investment vehicles and caused the failure of algorithmic stablecoins and crypto hedge funds, but the fallout to the wider financial system has been limited so far. ‘now.”
The statement is a deviation from the IMF’s previous stance towards the industry. The IMF has repeatedly urged El Salvador and the Central African Republic to reverse their decision to adopt Bitcoin. The regulator had also warned that crypto could pose significant challenges for policymakers.
Regulators remain worried
While the IMF says the crypto crash has had no negative effect on the broader financial system, financial regulators in several countries are increasingly concerned about the impact of the crypto market.
Regulators in the US, South Korea, the UK and several others have been working to introduce new regulations to better protect retail investors.
Meanwhile, the crypto industry continues to recover from last quarter’s record loss when the value of Bitcoin (BTC) crashed over 58%, plunging below the $20,000 region. Terra’s ecosystem also imploded during this time, wiping around $40 billion from the market.
Popular crypto companies like Celsius and Voyager had to file for bankruptcy, while a court ordered the liquidation of Three Arrows Capital.